Govt plan to curb charges for developers will force 8.5% rate rise by 2022 - council.

Auckland's rates will rise 8.5 per cent in eight years and debt will jump by $480 million if government goes ahead with housing affordability proposals which limit how much Auckland Council can charge developers, council officials say.

But Housing Minister Nick Smith says local authorities will need to "make hard choices" about the number and scale of parks, libraries and swimming pools and other community facilities they wanted if they were committed to the goal of bringing down skyrocketing house prices.

A council committee will today discuss a draft submission on law changes which were designed to rein in development levies.

Councils charge developers when their projects required them to spend more money on infrastructure such as parks, libraries, footpaths, stormwater or sewerage.


The National-led Government said development contributions had risen more than any other component of housing costs, from an average of $3000 to $14,000 in the past 10 years.

Its law changes would narrow the charges councils could demand from developers. Auckland would not be able to levy for community infrastructure apart from public toilets, playgrounds and community halls.

While it could still charge for core infrastructure such as transport, water and sewerage, it would have to fund community facilities such as parks, sports grounds and libraries with alternative sources such as rates.

Auckland Council said in its draft submission that it had planned $480 million in new community infrastructure in the next 10 years, and this would be paid for with development contributions.

"The bill ... leaves the council with two choices - either have inadequate infrastructure or fund the cost of borrowing from existing ratepayers."

If the proposals went ahead, the council predicted, the cost of paying for the community infrastructure, with a new appeals process, would lead to an 8.5 per cent rise in the average rates bill by 2021/22.

This would shift the cost of new development from new ratepayers to existing ratepayers, who were not responsible for the new growth.

The council said the community assets were not "nice to haves" but essential to the success of new communities and residents' well-being.

Dr Smith said the council "has got to decide whether it is serious about improving housing affordability within its city. Councils do have to make those hard choices."

The council said the Government should at least guarantee contributions allocated to projects already under way would not be cut.

Fee changes
* Development fees can be charged only if the project needs councils to provide new assets.
* Development fees must be consistent with the lifespan of the assets they are paying for.
* The types of charges councils can put on new sections will be narrowed.
* Councils cannot charge levies on non-residential developments to cover the cost of a new parks/reserves.
* Developers can appeal fees to an independent commissioner.